The Controversial, Contradictory, and Complex Ruling on ObamaCare

Thomas Miller is a resident fellow at the American Enterprise Institute and a former senior health economist for the Joint Economic Committee (JEC). He studies health care policy and regulation. A former trial attorney, journalist, and sports broadcaster, Mr. Miller is the co-author of Why ObamaCare Is Wrong For America (HarperCollins 2011) and heads AEI's "Beyond Repeal & Replace" health reform project. He has testified before Congress on issues including the uninsured, health care costs, Medicare prescription drug benefits, health insurance tax credits, genetic information, Social Security, and federal reinsurance of catastrophic events. While at the JEC, he organized a number of hearings that focused on reforms in private health care markets, such as information transparency and consumer-driven health care.

One day later and the Supreme Court’s ruling on ObamaCare doesn’t look any better than it did on Thursday morning when the Court narrowly upheld a health law that Congress never passed. Chief Justice John Roberts performed the legal equivalent of Olympian gymnastics in finding the individual mandate constitutional. But his “majority” 5-4 opinion for the Court is really an unusual majority of “one” that smacks of results-based rewriting of the actual text of the Affordable Care Act (ACA).

At the start of his opinion that decided the case, the Chief Justice appeared to be against the mandate before he was for it – in terms of constitutional law. He found that the law’s individual mandate was unconstitutional under the power of Congress to regulate interstate commerce, but, surprise, it was a constitutional “tax” after all. Four additional liberal justices were willing to join that decision, while making clear in their concurring opinion that they really believe that Congress could even regulate “inactivity” and compel individuals to enter into commerce.

“Why should the Chief Justice strive so mightily to hem in Congress’ capacity to meet the new problems arising constantly in our ever-developing economy?” wrote Justice Ginsburg. But she and her three other colleagues agreed to sign on quietly to the “tax” argument for the mandate, in order to save it.

The other four dissenting justices provided vigorous arguments to the contrary. They insisted that the entire health law should fall, as fatally flawed due both to the unconstitutional mandate and its coercive Medicaid expansion imposed on states. Justices Scalia, Kennedy, Thomas, and Alito stripped bare the pretense that the mandate was a tax rather than a (unconstitutional) penalty. For example, different groups of people are exempted from the mandate’s coverage command itself than those exempted from paying its penalty.

Chief Justice Roberts did try to close the open-ended commerce clause door to sweeping federal regulatory authority over just about anything. But then opened another door wider under the taxing powers of Congress. His judicial reasoning first carefully showed that the individual mandate was not a “tax” when it came to jurisdictional issues under the Anti-Injunction Act (thereby allowing the Court to decide the case). But, like the Decepticon robot villains in the “Transformers” series of movies, the mandate could be converted into a “tax” for constitutional authority purposes. Just pay no attention to the ACA’s statutory history and language, President Obama’s own words in pushing for the law, or even some earlier legal positions by his attorneys. In most of the lower federal courts that reviewed similar versions of this “tax or penalty” legal ploy, it failed to pass the “straight-face” test.

The bottom line is that the Chief Justice decided that the “tie” in constitutional law challenges goes to the federal government’s runners, and four other liberal justices were willing to do whatever was necessary to save ObamaCare. The law under the Constitution is, or becomes, whatever five or more justices say it is.

One might now think of the mandate penalty as an “exit fee” for Americans who wish to opt out of the coverage requirements of ObamaCare. Millions are likely to make that choice, given the sizable gap between the modest penalty amounts and their full costs of mandatory, government-approved coverage. Enforcement of the penalty/tax will be relatively weak, as well. Uninsured or otherwise non-compliant Americans who do not file federal income taxes, or those who do not expect to receive year-end tax refunds, will not spend any time in the IRS penalty box. On the other hand, the federal government may have gained a freer hand to regulate whatever it wants (broccoli, anyone?), as long as it just charges you more if you don’t comply! And Congress apparently won’t even have to admit that the penalty is a “tax” before it votes for it.

A secondary part of the majority decision (on a 7-2 vote) did limit the health law’s provisions regarding penalties for states that do not cooperate with its proposed expansion of Medicaid in 2014. To update an old Justice Potter Stewart saying about pornography, the Court finally knew it had a case of unconstitutional coercion by the federal government when it saw one (here). This provides some modest, incremental relief for debt-plagued state governments who will be able to just say no to Medicaid expansion, without risking loss of all federal matching funds for their old, pre-expansion Medicaid programs.

The overall decision to uphold most of the ACA joins a long parade of past disappointments at the Court for judicial conservatives. It may be a controversial, contradictory, and complex ruling, but this represents a major initial legal victory for the Obama administration and other ACA supporters. Opponents cannot afford many more such defeats that are “supposed” to make their political chances stronger this fall. The legal cement for an even larger bureaucratized federal welfare state is beginning to harden.

Thursday’s ruling also highlights the dangers for opponents who overinvested too narrowly in outsourcing a solution for their health policy problems to the Supreme Court. They have not yet built sufficient political support and attractive legislative proposals to both repeal and replace this unpopular law passed in March 2010. The months ahead between now and November elections await.

The initial burst of recriminations about the Court ruling, cries for Full Repeal in Congress, and Capitol Hill press releases blaming all current and future health care woes on the Obama administration will not be enough to change the facts on the ground. Most of the health care industry will resume shrugging its shoulders and falling back into line with the political deals it cut with the Obama administration several years ago. (It’s just “business in Washington,” after all).

The political case for substantial or total repeal will become much stronger where it matters – at the grass roots level beyond the Washington Beltway, and particularly among independent voters this fall — if it finally includes a credible, attractive agenda for “replace” that offers better solutions to chronic health policy problems and improves the lives of average Americans.

We can afford neither to try to fix a fatally flawed ACA nor just to go back to the pre-2010 status quo. The core issue is really one of power and accountability: Who will get to decide the key issues of how health care is purchased, provided, organized, and overseen?

Facilitating a more decentralized and market-based alternative to ObamaCare will require a combination of defined contribution financing of taxpayer subsidies (for Medicare, Medicaid, and private health insurance, respectively), and restructuring of the health care safety net (better financed high-risk pools, plus protection against insurance restrictions on pre-existing conditions — for those with continuous insurance coverage). A more competitive health care marketplace should encourage easier entry, more accountability to consumers, and less command and control regulation.

The courts and politicians may continue to disappoint us. Some critics of the Chief Justice’s surprise decision have gone too Shakespearian in describing this legal tragedy, by asking: “Et tu, John?” But another part of the Julius Caesar play offers better advice: “The fault lies not in our [judicial] stars, but in ourselves, that we are underlings.”

It’s up to everyone else to reclaim their own roles and responsibilities in fixing what Washington keeps breaking.

Tom Miller heads the “Beyond Repeal and Replace” project at the American Enterprise Institute, and is co-author of “Why ObamaCare Is Wrong for America”